What are Checkable Deposits?

Checkable deposits is a technical term for any demand deposit account against which checks or drafts of any kind may be written. (A demand deposit account means the owner can withdraw funds on demand, with no notice.)

They also include any kind of negotiable draft, such as a negotiable order of withdrawal (NOW) or Super NOW account. (NOW accounts may require seven days written notice before you withdraw money from them, but this is rarely required.)

How Checkable Deposits Work

Standard checkable deposit accounts are used for managing daily expenses and offer immediate access to cash. Checkable deposits have check-writing or draft capabilities. Innovative technologies are also increasing the money transfer and transaction capabilities for checkable accounts, providing for faster settlement and instant peer-to-peer transfers.

Checkable deposit accounts are the most liquid accounts a consumer can open.

Personal banking institutions are the primary place to open a checkable deposit account, and there are several types available to customers.

Key Takeaways

  • Checkable deposit accounts include checking, savings, and money market accounts.
  • Interest rates depend on the bank and the type of account.
  • A checkable deposit account allows the customer to access cash at any time.
  • Some types of checkable deposit accounts, like a money market account, may have a limit on monthly withdrawals.

Examples of Checkable Deposit Accounts

Standard Accounts

Standard personal checking and savings deposit accounts typically do not pay interest (or only very little interest) and often require investors to pay monthly fees for holding their assets. As investors increasingly accumulate assets, they may wish to seek alternatives with higher interest payouts and lower fees.

Common alternatives include high-interest checking accounts and money market accounts, both offered through personal banking services. Banks and other financial institutions may also offer special demand deposit accounts, such as Super NOW accounts or accounts that allow for negotiable drafts and negotiable orders of withdrawal.

High-Interest Accounts

If you have enough cash, you can find accounts that pay interest of around 1.5% or even more (as of July 2019, CIT Bank offered customers a 2.45% APY on an account with a $25,000 minimum deposit) if you keep balances of a certain size in the account—or in that bank. These accounts often have transaction requirements, as well, but they offer much higher interest rates than regular checking accounts, which were yielding an average interest rate of only about 0.6% on July 22, 2019, according to the FDIC.

Provident Bank offers one example of a high-interest checking account with demand deposits. The bank’s Provident Smart Checking Account pays 1.51% annual interest for balances up to $15,000. Investors meeting certain minimum monthly requirements, such as 10 debit card transactions and one direct deposit, qualify for the bank’s high interest rate.

Money Market Accounts

Money market accounts and funds are another option for investors seeking to accumulate wealth in liquid demand deposit accounts. Banks offer money market accounts with interest and invest these funds in short-term cash instruments, which allows them to pay out the interest to money market accountholders.

For example, as of July 2019, TIAA Bank offers a money market account with a 2.15% APY for customers with a $5,000 minimum balance and BBVA bank offers its customers a 2.50% APY, if they hold a $10,000 minimum balance.

Money market accounts typically have a limited number of withdrawals, due to the investments backing them. These accounts are usually insured by the Federal Deposit Insurance Corporation (FDIC).